New Zealand, the only developed country already in recession, also maintains the highest cash rate in the world, at 6.5%.
The call follows one of the most negative Otago Chamber of Commerce southern business confidence surveys seen in a decade, revealing deepening concerns about the extent of the recession.
Recent cash rates cuts by the United States, England, Australia , China, Denmark, Switzerland, Japan, Sweden and Norway are designed to cushion recession and boost some consumer activity in risk-averse and waning economies.
ABN Amro Craigs chief investment officer Cameron Watson said New Zealand's Reserve Bank should not wait until its scheduled cash-rate review on December 4, but should cut rates by at least 1% as the economic slowdown "will be more serious than forecast".
"Our central bank needs to follow the lead provided by overseas counterparts and reduce rates here. Perhaps it should also take a leaf from the the Bank of England and be bold about it," Mr Watson said.
The Bank of England slashed its cash rate by an unexpected 1.5% last week, following the Australian Reserve Bank 0.75% cut, on top of two earlier cuts totalling 1.25%.
By comparison, New Zealand's Reserve Bank did make an unprecedented 1% cut in late October to 6.5%, which was preceded for a year by the rate sitting at 8.5% until June.
A recent survey by the Otago Chamber of Commerce, one of the first southern surveys taken during the global sharemarket meltdown of the past four weeks, delivered unsurprising results from its September survey, but was one of the most negative in the past 10 years.
For the past three quarters to September, Otago members who thought there would be further business deterioration had gone from 13% (2006), to 10% (2007) then to 30% last September, and similarly, those believing there would be an improvement had plummeted from 40% (2006), to 42% (2007) and 28% last September.
Chamber chief executive John Christie said lowering the cash rate was a "double-edged sword", in that it would deprive investors of income and subsequently consumer spending - however, lower interest rates would make cash available for businesses.
"It would bring in working capital for business and help keep [rising] costs down and for that reason I'd like to see that [cash rate cut] happen," Mr Christie said.
He said members were generally more negative about the NZ economic expectations, rather than own-business expect-ations, but they were now reporting a "sinking-lid philosophy"; hiring fewer staff amid a downturn in sales and profitability, he said.
"The big question among members is how long before the economy turns," Mr Christie said.
Similarly, a BNZ confidence survey released yesterday said respondents' pessimism for the next 12 months had deepened, doubling from 20% a month earlier to 40% expecting the NZ economy to get worse.
"At the moment there are only a few tendrils of the crisis offshore feeling their way into the New Zealand economy, in the form of reduced availability of credit and a general weakening of sentiment, along with some easing of export commodity prices," BNZ chief economist Tony Alexander said.
He expected 2009 would have "quite large" challenges ahead, including falling tourism numbers, declining demand for manufactured goods, more pessimistic business and consumer sentiment and a downturn in residential construction.
ABN broker Peter McIntyre said a major effect of not dropping the cash rate in line with Australia's was creating a "huge fluctuations" in the currency cross rates, to the detriment of exporters doing business with our biggest trading partner.
He noted that while 80% of Australian mortgages were floating, and therefore interest cuts had an immediate impact on consumers, New Zealand's mortgages had about 80% on fixed terms.
"It takes a lot longer for our Reserve Bank cuts to impact and work their way into the market," Mr McIntyre said.
Historically, central banks were better to act "sooner rather than later" to try stimulating economies, he said.
A poll of about 12 economists last week had a split expecting cash rate cuts of 0.5%, 0.75 or 1% with the median on 0.5%.
ASB economist Jane Turner said markets were pricing in a 1% cut, but she noted very little had changed since the Reserve Bank cut rates by 1% and that New Zealand was feeling less stress than overseas economies.
Westpac economist Dominick Stephens expected a rate cut of 0.5% on December 4.
